Case Number: VC063682    Hearing Date: August 12, 2014    Dept: SE

STUART v. RECONTRUST CO.
CASE NO.: VC063682
HEARING: 08/12/14

#7
TENTATIVE ORDER

Defendants RECONTRUST COMPANY, N.A. and BANK OF AMERICA, N.A.’s demurrer to the Third Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND in its entirety. C.C.P. § 430.10(e), (f).

Plaintiffs NEAL STUART and SHEILA STUART allege that they were wrongfully denied a good faith review of their loan modification application, and assert several claims related to defendants’ activity with respect thereto. On May 29, 2014, the Court sustained with leave to amend defendants’ demurrer to the Second Amended Complaint. Essentially, the Court found that plaintiffs failed to allege sufficient facts to support their claims. Defendants again demur to the causes of action for breach of settlement agreement (1st), violation of the Homeowners Bill of Rights (2nd), unfair business practices (3rd), fraud (4th) and promissory estoppel (5th).

As noted by defendant Reconstrust, although it is named in the caption, none of the causes of action are asserted against it. For the reasons set forth below, the demurrer is sustained without leave to amend in its entirety.

1st—breach of settlement agreement
In December 2012, plaintiffs filed a complaint to avoid foreclosure. TAC, ¶¶7, 8. In February 2013, they entered into a settlement with lender, defendant Bank of America. ¶9, Exh. A. Plaintiffs agreed to dismiss the pleading in exchange for defendant’s agreement to stay foreclosure for 90 days and its agreement to consider in good faith plaintiffs’ loan modification application. ¶11.

Plaintiffs contend that defendants breached the agreement by providing a “hodgepodge” of contacts making it impossible for them to measure their progress or predict the status of their application, and by giving them confusing and contradictory instructions. Just as the Court found with the Second Amended Complaint, none of the details are alleged. There are no facts alleged to support the claim of breach by defendant, except for the conclusory allegation that the loan modification application was not processed in good faith.

2nd—violation of Homeowners’ Bill of Rights
Plaintiffs allege that defendant failed to maintain a single point of contact, in violation of section 2923.7. Plaintiffs again allege a “hodgepodge of sporadic action,” without reference to facts. TAC, ¶44-48.

Plaintiffs also allege that defendant engaged in dual-tracking, in violation of section 2923.6. ¶50. Again, plaintiffs allege that there was a “disorganized, uncontrolled procedure,” but aside from noting communications from five different offices, they do not allege any supportive facts.

3rd—violation of Business & Professions Code section 17200 et seq.
Plaintiffs allege defendant’s “few offices” were insufficient to handle the number of loan modifications, that the personnel was unqualified and that it should have known of those facts. ¶¶63, 68. Plaintiffs contend defendant also should have known that performing under the agreement was impossible due to defendant’s lack of organization and personnel. ¶64.

At paragraph 66, plaintiffs allege that their application was denied due to “negative surplus,” but also allege that there was no specific deficiency letter received. But see Comp., ¶28 (referencing a letter sent by defendant’s attorney explaining the basis for denial). They further allege that defendant “never intended to process the application.” ¶68. These allegations appear contradictory. They are also insufficient to support a claim for unfair business practices.

4th—fraud
Plaintiffs contend that defendant’s representations as to their willingness to assist plaintiffs with a short sale or loan modification were intentional. ¶77. They allege that such intent was fraudulent, and supportive of a claim for punitive damages.
The pleading is devoid of specific facts supporting the elements of fraud.

5th—promissory estoppel
Plaintiffs allege that they relied on defendant’s promise rather than pursuing alternative measures such as a short sale, deed in lieu of foreclosure or bankruptcy. ¶85. They allege general damages (without a statement as to causation).

Prior allegations may properly be considered by the Court in its evaluation of the sufficiency of the present pleading. Freeman v. San Diego Ass’n of Realtors (1999) 77 Cal.App.4th 171. As noted in the moving papers, many of the allegations contained in previous iterations of the pleading have been omitted. For example, plaintiffs previously alleged that the loan modification process went well initially and that in April 2013, they received two letters stating that their application was denied. FAC, ¶¶14, 22, 24. Upon further inquiry, plaintiffs were told that the application was denied based upon their capacity to pay. FAC, ¶¶29, 30. They appealed the decision, and such appeal was reviewed and denied. FAC, ¶38. Those allegations do not support plaintiffs’ boilerplate claim that defendant failed to act in good faith. As noted by defendant, there were no foreclosure actions by defendant during this process and until November 2013. See RJN, Exh. D.

Despite having been given opportunities, plaintiffs have failed to amend the pleading to include facts sufficient to support their claims, in accordance with the detailed orders the Court issued on the prior demurrers. See Orders, 04/01/14, 05/29/14. In opposition, plaintiffs argue that the allegations state the causes of action alleged. Again, the Court notes that plaintiffs’ communications with defendant are not alleged (either with reference to date or content). They do not explain why certain relevant facts, which were previously alleged, were omitted from the TAC. They do not allege that defendant’s actions were the legal cause of any recoverable damages.

Based on plaintiffs’ failure to cure the defects noted and in consideration of the prior allegations indicating defendant’s review of the loan modification request, the Court finds that there is no possibility that the pleading can be amended to state a valid cause of action. Accordingly, the demurrer is sustained without leave to amend.